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TMI Blog2021 (10) TMI 645X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. P.C. :- Heard Mr. Dwarkadas, learned senior counsel for the petitioners and Mr. Ravi Kadam along with Mr. Dhond, learned senior counsel for respondent No.1 - Reserve Bank of India. 2. By filing this petition under Article 226 of the Constitution of India, petitioners seeks quashing of the impugned order dated 01.10.2021 and the related press release dated 04.10.2021 issued by respondent No.1. 3. By the impugned order dated 01.10.2021 passed under section 45IE of the Reserve Bank of India Act, 1934, respondent No.1 has superseded the Board of Directors of respondent No.2 and has appointed Shri. Rajneesh Sharma as its administrator with immediate effect. The reasons for supersession of the Board of Directors have been mentioned in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10.2021, he submits that on 18th and 19th June, 2021, respondent No.2 had informed respondent No.1 that it had received nonbinding term sheets from Makara Capital, Singapore and Arena Investment for investment proposal worth Rs. 2200 crores and Rs. 2000 crores respectively. Respondent No.2 had approached respondent No.1 for in principle approval of such investment. The sudden impugned decision and the related threat of approaching NCLT for initiating corporate insolvency resolution process would jeopardize not only such investment proposals but the very future of the two NBFCs. Referring to the Covid-19 situation and the restrictions imposed on NBFCs by Reserve Bank of India, he submits that on the one hand NBFCs were required to pay princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Peerless General Finance and Investment Company Limited Vs. Reserve Bank of India, (1992) 2 SCC 343. He, therefore, seeks dismissal of the writ petition. 8. Submissions made by learned counsel for the parties have received the due consideration of the Court. 9. At the outset, we may extract the impugned order dated 01.10.2021 along with the annexure appended thereto for ready reference. Order dated 01.10.2021 along with the annexure reads as under:- "Executive Director CO.DOR.ISG.No.51467/20.07.007/2021-2022 October 01, 2021 Supersession of the Board of Directors of M/s Srei Infrastructure Finance Limited, Kolkata, West Bengal under Section 45-IE of the Reserve Bank of India Act, 1934 Order Srei Infrastructure Finance Limite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SIFL and Srei Equipment Finance Limited (SEFL) had on July 04, 2019 approved transfer of assets and liabilities (including liabilities towards issued and outstanding NCDs) of SIFL by way of slump exchange to SEFL with effect from October 01, 2019. Despite non-receipt of No-objection certificate (NOC) from majority of the lending institutions, SIFL and SEFL had given effect to the slump exchange. iii. Several supervisory concerns (e.g. violation of IRACP norms, evergreening of NPA accounts, connected lending, weak corporate governance standards, inadequate systems and control, poor compliance standards etc.) observed during past inspections by the Reserve Bank have been communicated through supervisory letters, DO letters and also reiterat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conferred under section 45IE of the RBI Act has superseded the Board of Directors of respondent No.2 and has appointed Shri. Rajneesh Sharma as its administrator with immediate effect. 9.2. The major reasons for supersession of the Board of Directors are mentioned in the annexure appended to the impugned order dated 01.10.2021. While the total borrowings of respondent No.2 stood at Rs. 11,476 crores as on 30.06.2021, it has defaulted with 12 lenders aggregating Rs. 3,566 crores. Board of Directors of both respondent Nos.2 and 3 had on 04.07.2019 approved transfer of assets and liabilities of respondent No.2 by way of slump exchange to respondent No.3 with effect from 01.10.2019. However, despite non-receipt of no objection certificate from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... event the affairs of a non-banking financial company being conducted in a manner detrimental to the interest of the depositors or creditors or for securing the proper management of such company or for financial stability, it is necessary so to do. Upon such supersession, it may appoint a suitable person as the administrator. 11. Coming to the press release dated 04.10.2021, not only Reserve Bank of India has informed about supersession of the Board of Directors and appointment of administrator but it has also informed that it intends to shortly initiate the process of corporate insolvency resolution of respondent Nos.2 and 3 under the Insolvency and Bankruptcy Code, 2016 and more particularly under the Insolvency and Bankruptcy (Insolvency ..... X X X X Extracts X X X X X X X X Extracts X X X X
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